President Trump won a major victory on trade on Monday, supplanting the North American Free Trade Agreement (NAFTA) and replacing it with something far more beneficial. The new deal will help American workers and manufacturers.
It’s also a win for Mexico.
One of the most fundamental parts of Trump’s campaign for president was his promise to change America’s deeply flawed trade arrangements.
These deals left us with massive $500 billion trade deficits—a huge drag on the economy—and devastated forgotten communities across America that are dependent on manufacturing jobs.
Second only to the booming economy, Monday’s announcement of a deal with Mexico is the most visible manifestation of Trump’s fulfilment of his campaign promises. Last year, the USA had a large $71 billion trade in goods deficit with Mexico, owing in part to much lower worker pay. This new deal will limit Mexico’s ability to take U.S. manufacturing jobs by underpaying workers.
Another key part of the new trade deal increases the percentage of a car that must be made in North America to qualify for lower-tariff import into the USA. This will be a major boon to American automotive workers and that industry’s domestic supply chain.
Stocks skyrocketed as the United States and Mexico closed a new trade deal, potentially removing a source of uncertainty that had been plaguing investors for months.
The S&P 500 gained 0.8 percent to close at 2,896.74 — a record high — with materials and financials as the best-performing sectors. The Nasdaq Composite climbed 0.9 percent to an all-time high, breaking above 8,000 points for the first time, as Facebook, Amazon, Netflix and Alphabet rose. Tech’s gains led the Nasdaq to close at 8,017.90.
The Dow Jones Industrial Average rose 259.29 points to 26,049.64 as Caterpillar outperformed. Monday also marked the first time since Feb. 1 that the Dow closed above 26,000, CNBC reports.
More broadly, the deal vindicates Trump’s approach to trade, which has been lambasted by voices ranging from Wall Street to the national security establishment to the Chamber of Commerce, as well as mavens from both political parties.
They said nothing could come from Trump’s unilateral imposition of tariffs in order to get foreign governments to negotiate seriously. They said a “trade war” would be self-defeating.
On Monday, they have been proved wrong by an unmitigated victory for the USA, Fox News reports.
Trump understood the simple math that countries with which we have trade deficits would have to come to the negotiating table. By definition, we buy more from them than they buy from us, which gives us the power any major consumer has over a seller.
These countries also cannot afford to lose access to our $20 trillion economy—the world’s largest. Trump realized the power this gives us and decided to use it to level the playing field for American workers—unlike other recent presidents.
This victory will lead to others. The leftwing government of Canada, the other member of NAFTA, had refused to negotiate seriously, perhaps believing their friends in the progressive commentariat predicting Trump’s demise.
Canada’s foreign minister, Chrystia Freeland, spent most of her time on visits to the U.S. lobbying governors and congressmen rather than talking seriously to our trade negotiators. Her boss, Prime Minister Justin Trudeau, even though it was a good idea to antagonize Trump at his failed G7 summit in June.
Canada must now return, hat in hand, for a deal. If not, Trump will advance the deal with Mexico and leave Canada behind. Today he again vowed to raise car tariffs on Canada if it refuses to revise unfair levies of nearly 300 percent on some American goods, among other unfair practices.
The European Union and China will also be greatly concerned about the Mexico deal—and more likely to negotiate seriously.
Europe last year had a $151 billion surplus with the USA. When combined with the fact that we pay for most of their defense through NATO, Europe has benefited greatly from past U.S. administrations’ willingness to let Europe leach off of American workers and taxpayers.
In other great economic news, a study shows massive growth among first time business owners. The growth has been so explosive, minorities now own nearly half of all small businesses in the United States.
African American business owners are on the rise.
According to the Minority 2018 Small Business Trends survey, the number of black-owned small businesses in the U.S. increased by a staggering amount from 2017 to 2018.
The new survey, which was conducted by Guidant Financial, interviewed more than 2,600 business owners and aspiring entrepreneurs. It found that 45% of all small business in the country were owned by minority ethnic groups in 2018.
This is a dramatic uptick from 2015 when the total percentage of minority business owners was 15%. The largest minority group of respondents were African American at 19%, followed by Hispanic at 14%, Asian at 8%, and Native American at 4%.
Of the African American small business owners surveyed, 63% identified as men and 38% as women. Most fell between the ages of 40 to 49 with 28%, while 25% were between 50 and 59 years old, and 22% are 30 to 39. The research also showed that the highest volume of African American entrepreneurs lives in Texas, followed by Georgia, California, Florida, and North Carolina.
David Nilssen, CEO of Guidant Financial, said in a statement that he is excited about the rise of minority small business owners around the nation. “Growth amongst all minorities including women is promising in America as small business ownership becomes more favorable and easier to attain. We anticipate and hope to see a continued increase as the impact of tax reform and economic growth shape small business ownership moving forward.”
WHY BLACK AMERICANS ARE STARTING BUSINESSES
Sixty-two percent of African Americans said their desire to pursue their passion motivated them to start a business. Another 53% said they were ready to be their own boss. Meanwhile, 30% said they launched a startup when the “opportunity presented itself” and 22% said they were dissatisfied with working in corporate America. Twelve percent said they launched a business after being laid off or outsourced.
THE CHALLENGES OF BLACK ENTREPRENEURSHIP
An overwhelming majority of black entrepreneurs surveyed, 80%, said lack of capital was the most challenging aspect of running a business. According to ProjectDiane, only 0.2% of all venture capital funding was allocated toward startups founded by black women in 2016, while just 34 black women business owners received more than million dollars of funding in the last year.
As a result, many African Americans are forced to fund their own business. In fact, 70% of those surveyed financed their companies using cash, while 23% received funding from friends and family. Eleven percent said they tapped into their 401(k) plans to fund their businesses.
The employment cost index, a gauge of total compensation for civilian workers, increased 0.6% in the second quarter. The cost of pay and benefits jumped 2.8% in the 12-month period ended in June, the highest yearly growth rate in nearly a decade.
Wages alone gained 2.8% over the past 12 months, which also reflected a near 10-year high.
Growth in benefits outpaced wages in the second quarter. Wages were up 0.5%. Benefits, which cover health care, retirement plans and other items, jumped 0.9%. That marks the fastest pace in four years.
Meanwhile, private workers fared better than the public sector. Total compensation in the private industry rose 2.9%, while government workers saw a 2.3% increase.
In a separate report, the Commerce Department said the price index for personal consumption expenditures rose 2.2% year-over-year in June, another sign that inflation is trending higher. The Federal Reserve plans to raise rates two more times in 2018, bringing the annual total to four, to counter rising inflation.
James E Windsor, Overpasses News Desk
August 26th, 2018